SOURCE: ShopNBC
November 18, 2010 09:00 ET
ShopNBC Q3 Adjusted EBITDA Rose to Positive $0.6 Million From a Loss of $5.6 Million as Net Sales Increased 11% to $132 Million
MINNEAPOLIS, MN--(Marketwire - November 18, 2010) - ShopNBC (NASDAQ: VVTV)
-- Net sales increased 11% to $132 million
-- Positive adjusted EBITDA of $0.6 million vs. ($5.6) million
-- Gross Profit increased 19% to $47 million
-- E-commerce sales penetration increased 680 bps to 40.5%
ShopNBC (NASDAQ: VVTV), the premium lifestyle brand in multi-media
retailing, today announced financial results for its fiscal third quarter
ended October 30, 2010. The company will host a conference call and webcast
to review its results today at 11:00 a.m. ET. Details provided below.
SUMMARY RESULTS AND KEY OPERATING METRICS
($ Millions, except average price points)
Q3 YTD
For the three months ending For the nine months ending
------------------------------ -----------------------------
10/30/2010 10/31/2009 Change 10/30/2010 10/31/2009 Change
--------- --------- -------- --------- --------- -------
Net Sales $ 132.3 $ 119.4 10.8% $ 383.4 $ 372.6 2.9%
EBITDA $ 0.6 $ (5.6) N/A $ (5.7) $ (18.2) 68.8%
as adjusted
Net Loss $ (5.8) $ (12.9) 55.0% $ (24.5) $ (33.2) 26.2%
Homes 76,768 73,063 5.1% 76,032 73,097 4.0%
(Average 000s)
Net Shipped 1,317 1,186 11.0% 3,590 3,084 16.4%
Units (000s)
Average $ 93 $ 95 -2.5% $ 99 $ 114 -13.3%
Price
Return Rate % 20.8% 21.9% -110 bps 20.2% 21.8% -160 bps
Gross Margin % 35.6% 33.2% 240 bps 36.5% 33.1% 340 bps
Internet Net 40.5% 33.7% 680 bps 39.8% 31.5% 830 bps
Sales %
New 562,510 486,474 15.6% N/A N/A
Customers
12 month
rolling
Active 1,110,187 959,508 15.7% N/A N/A
Customers
12 month
rolling
"Our experienced multi-channel team achieved another consecutive quarter of
improved performance," said Keith Stewart, CEO of ShopNBC. "Sales growth of
11%, gross margin improvements, and lower transactional costs contributed
to a $0.6 million adjusted EBITDA profit in the third quarter. New and
active customers in the quarter continued to engage, interact and shop
across our multiple channels with e-commerce sales penetration of 40.5%, up
680 basis points compared to last year. This overall progress is a
validation of our continued focus and efforts to turn the company around
while executing on new strategies for growth."
Mr. Stewart added: "Going forward, we will continue to focus on
customer-centric strategies that will help us build on our existing base.
We intend to improve operating processes and gain added efficiencies
through disciplined execution and lower transactional costs. Lastly, as the
year comes to a close, we anticipate entering into negotiations with
several of our cable and satellite affiliates -- representing approximately
25% of our household footprint -- to further reduce distribution costs and
improve our channel positioning."
"We are committed to delivering long-term sustained growth. As part of
these efforts, we are launching a proactive investor relations outreach
program and have recently retained a New York-based IR firm to assist us in
that effort."
Third Quarter 2010 Results
Third quarter revenues rose 11% to $132.3 million vs. Q3 2009. The company
continued to make progress in its strategy to drive transaction volumes
through the reduction of its net average selling price, which decreased
2.5% to $93 vs. $95 in the year-ago quarter while net shipped units
increased by 11%. E-commerce sales, which carry lower transaction costs,
grew to 40.5% of total company sales in the quarter, from 33.7% in Q3 2009.
Customer trends continued to improve with new and active customers
increasing 15.6% and 15.7%, respectively, on a 12-month rolling basis vs.
Q2 2009. Return rates for the quarter declined to 20.8% vs. 21.9% in Q3
2009, reflecting improvements in overall customer satisfaction and the
benefit of strategic pricing changes.
Gross profit increased 19% to $47.1 million and gross profit margin
improved 240 bps to 35.6% vs. 33.2% last year, largely driven by
merchandise margin rate improvements across several key categories.
Adjusted EBITDA was positive $0.6 million compared to an adjusted EBITDA
loss of $5.6 million in the year-ago period, driven by increased sales,
improved gross margin and lower operating expenses.
Operating expenses in the third quarter decreased approximately 1% to $50.8
million, due to lower transactional costs and the impact of prior-year
itemized non-recurring expenses.
Net loss for the third quarter was reduced to ($5.8) million compared to a
net loss of ($12.9) million for the same quarter last year.
Liquidity and Capital Resources
The Q3 quarter-end cash and cash equivalents balance was $20.6 million,
including $5.0 million of restricted cash. The cash and cash equivalents
balance declined $2.3 million from the second quarter, driven by working
capital use in the quarter. On a year-to-date basis, cash and cash
equivalents have decreased $1.4 million.
Additionally, the company recently announced that it entered into a $25
million term loan with a lending group led by Crystal Financial LLC. The
loan has a 5-year maturity, bears a variable interest rate, which will
initially be set at 11%, and will be used to finance general working
capital needs. The loan replaces a previous $20 million revolving credit
facility, and is secured primarily by the company's inventory and accounts
receivable.
Conference Call / Webcast Information
Conference Call Dial-In: 1-800-369-2063 (pass code: 7467622; keypad:
SHOPNBC)
Webcast URL: https://e-meetings.verizonbusiness.com conference number
8656218, pass code: SHOPNBC. An archived version of the webcast will be
available for 30 days.
Call Replay: 1-800-867-1929 with pass code 81810, available for 30 days.
About ShopNBC
ShopNBC is a multi-media retailer operating with a premium lifestyle brand.
Over 1 million customers benefit from ShopNBC as an authority and
destination in the categories of home, electronics, beauty, health,
fitness, fashion, jewelry and watches. As part of the company's "ShopNBC
Anywhere" initiative, customers can interact and shop via cable and
satellite TV in 76 million homes (DISH Network channels 134 and 228;
DIRECTV channel 316); mobile devices including iPhone, BlackBerry and
Droid; online at www.ShopNBC.com; live streaming at www.ShopNBC.TV; and social networking sites Facebook, Twitter and
YouTube. ShopNBC is owned and operated by ValueVision Media (NASDAQ: VVTV).
For more information, please visit www.ShopNBC.com/IR.
EBITDA and EBITDA, as adjusted
EBITDA represents net loss for the respective periods excluding
depreciation and amortization expense, interest income (expense) and income
taxes. The company defines Adjusted EBITDA as EBITDA excluding
non-operating gains (losses); non-cash impairment charges and write-downs;
restructuring, rebranding, and chief executive officer transition costs;
and non-cash share-based compensation expense. The company has included the
term "Adjusted EBITDA" in our EBITDA reconciliation in order to adequately
assess the operating performance of our "core" television and internet
businesses and in order to maintain comparability to our analyst's coverage
and financial guidance, when given. Management believes that Adjusted
EBITDA allows investors to make a more meaningful comparison between our
core business operating results over different periods of time with those
of other similar companies. In addition, management uses Adjusted EBITDA as
a metric measure to evaluate operating performance under its management and
executive incentive compensation programs. Adjusted EBITDA should not be
construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with generally
accepted accounting principles and should not be construed as a measure of
liquidity. Adjusted EBITDA may not be comparable to similarly entitled
measures reported by other companies.
Forward-Looking Information
This release contains certain "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations and accordingly
are subject to uncertainty and changes in circumstances. Actual results may
vary materially from the expectations contained herein due to various
important factors, including (but not limited to): consumer spending and
debt levels; interest rates; competitive pressures on sales, pricing and
gross profit margins; the level of cable and satellite distribution for the
company's programming and the fees associated therewith; the success of the
company's e-commerce and new sales initiatives; the success of its
strategic alliances and relationships; the ability of the company to manage
its operating expenses successfully; the ability of the Company to
establish and maintain acceptable commercial terms with third party vendors
and other third parties with whom the Company has contractual
relationships; changes in governmental or regulatory requirements;
litigation or governmental proceedings affecting the company's operations;
and the ability of the company to obtain and retain key executives and
employees. More detailed information about those factors is set forth in
the company's filings with the Securities and Exchange Commission,
including the company's annual report on Form 10-K, quarterly reports on
Form 10-Q, and current reports on Form 8-K. The company is under no
obligation (and expressly disclaims any such obligation) to update or alter
its forward-looking statements whether as a result of new information,
future events or otherwise.
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share and per share data)
October 30, January 30,
2010 2010
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 15,674 $ 17,000
Restricted cash and investments 4,961 5,060
Accounts receivable, net 57,312 68,891
Inventories 51,997 44,077
Prepaid expenses and other 4,029 4,333
----------- -----------
Total current assets 133,973 139,361
Property and equipment, net 26,651 28,342
FCC broadcasting license 23,111 23,111
NBC Trademark License Agreement, net 1,734 4,154
Other Assets 1,386 1,246
----------- -----------
$ 186,855 $ 196,214
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 51,618 $ 58,777
Accrued liabilities 44,493 26,487
Deferred revenue 728 728
----------- -----------
Total current liabilities 96,839 85,992
Deferred revenue 607 1,153
Long Term Payable 1,937 4,841
Accrued Dividends - Series B Preferred Stock 8,903 4,681
Series B Mandatorily Redeemable Preferred Stock 12,531 11,243
$.01 par value, 4,929,266 shares authorized;
4,929,266 shares issued and outstanding
----------- -----------
Total liabilities 120,817 107,910
Commitments and Contingencies
Shareholders' equity:
Common stock, $.01 par value, 100,000,000
shares authorized; 32,796,077 and 32,672,735
shares issued and outstanding 328 327
Warrants to purchase 6,022,115 shares of
common stock 637 637
Additional paid-in capital 318,932 316,721
Accumulated deficit (253,859) (229,381)
----------- -----------
Total shareholders' equity 66,038 88,304
----------- -----------
$ 186,855 $ 196,214
=========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
For the Three Month For the Nine Month
Periods Ended Periods Ended
------------------------ ------------------------
October 30, October 31, October 30, October 31,
2010 2009 2010 2009
----------- ----------- ----------- -----------
Net sales $ 132,283 $ 119,441 $ 383,437 $ 372,588
Cost of sales 85,234 79,774 243,495 249,172
----------- ----------- ----------- -----------
Gross profit 47,049 39,667 139,942 123,416
Operating expense:
Distribution and
selling 42,752 41,774 133,815 130,898
General and
administrative 4,445 4,264 14,007 13,200
Depreciation and
amortization 2,997 3,507 10,215 10,723
Restructuring costs 412 126 838 715
Rebranding costs 39 - 39 -
CEO transition costs - 1,567 - 1,867
----------- ----------- ----------- -----------
Total operating
expense 50,645 51,238 158,914 157,403
----------- ----------- ----------- -----------
Operating loss (3,596) (11,571) (18,972) (33,987)
----------- ----------- ----------- -----------
Other income
(expense):
Interest income - 2 51 365
Interest expense (2,203) (1,350) (6,148) (3,328)
Gain on sale of
investments - - - 3,628
----------- ----------- ----------- -----------
Total other income
(expense) (2,203) (1,348) (6,097) 665
----------- ----------- ----------- -----------
Loss before income
taxes (5,799) (12,919) (25,069) (33,322)
Income tax (provision)
benefit (15) - 591 157
----------- ----------- ----------- -----------
Net loss (5,814) (12,919) (24,478) (33,165)
Excess of preferred
stock carrying value
over redemption value - - - 27,362
Accretion of
redeemable
Series A preferred
stock - - - (62)
----------- ----------- ----------- -----------
Net loss available to
common shareholders $ (5,814) $ (12,919) $ (24,478) $ (5,865)
=========== =========== =========== ===========
Net loss per common
share $ (0.18) $ (0.40) $ (0.75) $ (0.18)
=========== =========== =========== ===========
Net loss per common
share
---assuming dilution $ (0.18) $ (0.40) $ (0.75) $ (0.18)
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding:
Basic 32,781,462 32,332,278 32,721,377 32,569,618
=========== =========== =========== ===========
Diluted 32,781,462 32,332,278 32,721,377 32,569,618
=========== =========== =========== ===========
VALUEVISION MEDIA, INC.
AND SUBSIDIARIES
Reconciliation of EBITDA, as adjusted, to Net Loss:
For the Three Month For the Nine Month
Periods Ended Periods Ended
------------------------ ------------------------
October 30, October 31, October 30, October 31,
2010 2009 2010 2009
----------- ----------- ----------- -----------
EBITDA, as adjusted
(000's) $ 578 $ (5,630) $ (5,656) $ (18,152)
Less:
Non-operating gain
on sale of
investments - - - 3,628
Restructuring
costs (412) (126) (838) (715)
CEO transition
costs - (1,567) - (1,867)
Rebranding costs (39) - (39) -
Non-cash
share-based
compensation (616) (741) (2,114) (2,530)
----------- ----------- ----------- -----------
EBITDA (as defined) (a) (489) (8,064) (8,647) (19,636)
----------- ----------- ----------- -----------
A reconciliation of
EBITDA to net loss is
as follows:
EBITDA, as defined (489) (8,064) (8,647) (19,636)
Adjustments:
Depreciation and
amortization (3,107) (3,507) (10,325) (10,723)
Interest income - 2 51 365
Interest expense (2,203) (1,350) (6,148) (3,328)
Income taxes (15) - 591 157
----------- ----------- ----------- -----------
Net loss $ (5,814) $ (12,919) $ (24,478) $ (33,165)
=========== =========== =========== ===========
(a) EBITDA as defined for this statistical presentation represents net
income (loss) for the respective periods excluding depreciation and
amortization expense, interest income (expense) and income taxes. The
Company defines EBITDA, as adjusted, as EBITDA excluding non-operating
gains (losses); non-cash impairment charges and writedowns, restructuring,
rebranding and CEO transition costs; and non-cash share-based compensation
expense.
Management has included the term EBITDA, as adjusted, in its EBITDA
reconciliation in order to adequately assess the operating performance of
the Company's "core" television and Internet businesses and in order to
maintain comparability to its analyst's coverage and financial guidance
when given. Management believes that EBITDA, as adjusted, allows investors
to make a more meaningful comparison between our core business operating
results over different periods of time with those of other similar
companies. In addition, management uses EBITDA, as adjusted, as a metric
measure to evaluate operating performance under its management and
executive incentive compensation programs. EBITDA, as adjusted, should not
be construed as an alternative to operating income (loss) or to cash flows
from operating activities as determined in accordance with GAAP and should
not be construed as a measure of liquidity. EBITDA, as adjusted, may not
be comparable to similarly entitled measures reported by other companies.